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MINISTRY OF EDUCATION AND TRAING UNIVERSITY OF ECONOMICS HCMC LE THI TUYET THANH INFORMATIONAL ASYMMETRIES AND THE DEMAND FOR VEGETABLE IN HCMC MAJOR: DEVELOPMENT ECONOMICS CODE: 9310105 PH.D DISSERTATION EXECUTIVE SUMMARY HO CHI MINH CITY 2019 INTRODUCTION This study is motivated by the asymmetric information problem on HCMC vegetable market, in which a large proportion of vegetable does not comply with safety and hygiene standards In most cases, consumers can not recognize the safety attributes of vegetable, and thus can not distinguish the conventional vegetable and safe vegetable This results in two problems One is that producers may apply unsafe production techniques to maximize their own profits (moral hazards) The other is safe vegetable can be driven out of the market being unable to compete with conventional vegetable (adverse selection) These two problems result in the failures of safe vegetable market in HCMC Both buyers and distributors have taken measures to overcome these problems Lacking information, consumers try to seek information about safety and hygiene standards of vegetable to be able to buy safe vegetable The prevalent information channels in HCMC are internet, television, and newspaper, which can affect consumer behavior and thus influence the development of safe vegetable market Understanding the effect of these channels on the demand for safe vegetable, the preferences for the safety attributes, and vegetable store choice are therefore important to the safe vegetable distributors in expanding their market share The results of this study also help policymakers in providing information and selecting the appropriate channels to develop the market for safe vegetable The safe vegetable distributors, especially those of modern distribution channels, confronted many difficulties in competing with conventional vegetable in the context that buyers can not distinguish the two types of vegetable The first problem is how to set vegetable prices in such a way that can compensate for the high production and distribution costs and at the same time, accepted by consumers The second one is which safety standards are important to consumers in order to have the relevant development strategy The last one is what store attributes are critical to vegetable buyers in order to attract more shoppers RESEARCH OBJECTIVES AND METHODOLOGY Stemming from the above problems, this study proposes the following research objectives Objective 1: Analyze the impact of information and informationseeking behavior of safety and hygiene standards on the demand for safe vegetable The research results help sellers realize the response of consumer to the safe vegetable prices in order to develop reasonable pricing strategy The results also show the effect of information on the demand for safe vegetable, thereby assisting policymakers in providing information and selecting appropriate information channels to promote the safe vegetable market This goal is solved by estimating the demand equation system for both conventional and safe vegetables, with Linear Approximation Almost Ideal Demand System (LA-AIDS), controlling for endogeneity of prices and zero demand Objective 2: This ojective analyses the effect of information and information-seeking behavior of safety and hygiene standards on the willingness to pay for vegetable attributes This is to have the suitable policy in improving quality and safety attributes to attract more buyers The findings provide information for vegetable distributors to develop price strategy in conjunction with appropriate marketing procedures to maximize profits This objective applies Choice Experiment method to estimate the willingness to pay for safe vegetable attributes, using Conditional Logit (CL) and Mixed Logit (MX) models Objective 3: Investigate the influence of information and information-seeking behavior of safety and hygiene standards on the vegetable store choice Other factors under consideration include the distribution channel attributes and consumer characteristics The Multinomial Logit Model (MNL) is used to analyze the impact of buyer characteristics on the store choice decision of buying vegetable, while the Conditional Logit model is used to explore the effect of distribution channel attributes on the store choice decision This study help sellers to perceive factors that need to be improved in order to attract more consumer This study also helps to examine the target customer group of each vegetable distribution channel, as well as find out which information channel are mostly effective to appeal target customer The conceptual framework of this study is summarized in Figure BUYER CHARACTERISTICS ▪ Individual characteristics: age, gender, education, occupation, bargaining habit, number of vegan days ▪ Household characteristics: income, number of meals, household size, number of childrens, elders ▪ Market price (endogenous) LA-AIDS vegetable groups ▪ Frequency of accessing information via TV, newspapers and internet ▪ Number of poisonings cases watched ▪ Number of poisoning cases experienced by family members in the past 12 months MNL models CL/MX models Certification Safety guarantee Store format Packaging & information Price Objective Store choice Interaction SAFE ATTRIBUTES OF VEGETABLE ▪ ▪ ▪ ▪ ▪ Demand for vegetable INFORMATION Interaction DISTRIBUTION CHANNEL CHARACTERISTICS Price Distance Freshness Diversity Input control Preprocessing Providing information Safety level Objective Objective CE with CL/MX models Figure 1: Conceptual framework WTP for safety attributes The study uses survey data of 320 people who bought vegetables in HCMC in 2018 The information factors and informationseeking behavior of buyers is the main explanatory variable in all the three research objectives Specifically, the information of poisoning and safety and hygiene standard violation, as well as the frequency of monitoring safety and hygiene standards through communication channels, were included to analyze the impact on safe vegetable demand, WTP for safe vegetable, and store choice behavior OBJECTIVE 1: INFORMATION AND THE DEMAND FOR VEGETABLE Identification of vegetable groups The study classifies vegetables on the market into groups: leafty vegetables (including flower and stem groups), root vegetables and fruits (vegetable family) Thus, the estimated equation system will comprise equations: equations for the conventional vegetables of leaves, roots and fruits, and other equations for the safe vegetables that eat leaves, roots and fruits Then measuring the average weekly quantity demanded of vegetable groups in the past months Prices and the issues of missing prices and endogeneity Prices in this objective has an endogeneity problem caused by the zero demand that would result in no information of prices, and the heterogeneity in quality of vegetable, which results in the simultaneity between expenditure share and prices To solve the endogeneity, prices are initially regressed on the variables representing the survey location and household characteristics Households are surveyed in the same period (several days) and location (these households supposedly under the same cluster) have identical price level for each type of vegetable, and the diffference of price among the households (if any) because of variations in the quality and measurement errors The predicted price from sub-regression model would eliminate these differences The auxiliary regression is ln 𝑝𝑟𝑖𝑐𝑒𝑖𝑘 = 𝛼0 + 𝛼1 𝐶𝑘 + 𝛼2 𝐷𝑘 (1) where 𝑝𝑟𝑖𝑐𝑒𝑖𝑘 be the price of vegetables 𝑖 (there are categories, 𝑖 = 1,2, … ,6, and sub-regression equations respectively) for household 𝑘, 𝐷𝑘 be the characteristics of buyers and households 𝑘, 𝐶𝑘 be the dummy variables describe the cluster The cluster is determined by ward/commune The households surveyed in the same ward/commune will be considered in the same cluster The variables of characteristics of buyers and households are shown in Table Bảng 1: Characteristics of buyers and their families Variable Definition Number of meals/week The average number of home-cooked meals per week Age Age of vegetable buyer Household size Number of members who regularly eat at (persons) home in the household Number of childrens The number of childrens under in the household Number of elders The number of peoples over 60 in the household Household income Total income of household members (mil VND/month) Number of vegan The average number of vegan days per days/month month of buyer Gender (1 = Male) Dummy variable, the gender of vegetable buyer, = Male Bargain (1 = Yes) Dummy variable, = Having bargain habit while purchasing Occupation (*) Unskilled worker (baseline) Office worker Manager Skilled worker Homaker Student Others Education (*) Finished primary or less (baseline) Finished secondary Finished high school Finished college Finished university or higher The adjusted price would be: ̂ 𝑖𝑘 = 𝛼 ̅ ln 𝑝𝑟𝑖𝑐𝑒 ̂0 + 𝛼 ̂𝐶 ̂𝐷 (2) 𝑘+𝛼 𝑘 ̅𝑘 be the household characteristics, taking the average where 𝐷 value of sample The category variables are assigned by the most frequent values in the sample, whereby the dummy variables of education and occupation in the model are made for high school and homemaker The predicted price ln 𝑝𝑟𝑖𝑐𝑒 ̂ 𝑖𝑘 would be used into the model Zero demand and sample selection bias The safe vegetable groups might have a significant number of households with zero demand As a result, the quantity demanded or the expenditure ratio which is censored from and the normal estimation method could be bias This goal employs two-step estimation method of Heckman (1976) to deal with this problem According to this method, in step 1, the consumer is assumed to decide whether consume each type of vegetable or not: 𝑑𝑖𝑘 = 𝛼𝐷𝑘 + 𝛾𝐼𝑘 + 𝑢𝑖𝑘 (3) where 𝑑𝑖𝑘 be a dummy variable indicates whether household 𝑘 consumes vegetable 𝑖 or not, 𝐷𝑘 and 𝐼𝑘 be the exogenous variable explains for the choice of consuming vegetable, in which 𝐷𝑘 be the characteristics of individual and household, and 𝐼𝑘 be the information variables are shown in Table Bảng 2: The frequency of tracking safety and hygiene standards information and poisonings Variable Tracking safety and hygiene standards information via TV Tracking safety and hygiene standards Definition The frequency of tracking safety and hygiene standards information via TV (*): Under once/month (baseline) More than once/month More than once/week Per day The frequency of tracking safety and hygiene standards information via newspaper(*): Under once/month (baseline) information newspaper via Tracking safety and hygiene standards information via internet Number of poisoning cases watched per month Number of violations of safety and hygiene standards watched per month Number of poisonings cases experienced in 12 months More than once/month More than once/week Per day The frequency of tracking safety and hygiene standards information via internet(*): Under once/month (baseline) More than once/month More than once/week Per day The number of food poisoning cases watched per month, on average in the past months The number of violations of safety and hygiene standards watched per month, on average in the past months The number of poisoning symptoms of family members experienced in the past 12 months Then the demand (or expenditure) function would be defined as 𝑞𝑖𝑘 = 𝛽𝑋𝑖𝑘 + 𝜀𝑖𝑘 if 𝑑𝑖 > 𝑞𝑖𝑘 = if 𝑑𝑖 ≤ where 𝑋𝑖𝑘 is a vector of explanatory variables for demand function would be described in the following section The expected quantity demanded of demand (or expenditure) function with distributed assumption would be 𝐸(𝑞𝑖𝑘 |𝑋𝑖𝑘 , 𝑑𝑖 > 0) = 𝛽𝑋𝑖𝑘 + 𝐸(𝜀𝑖𝑘 |𝑢𝑖𝑘 > −𝛼𝐷𝑘 − 𝛾𝐼𝑘 ) (4) and: 𝐸(𝜀𝑖𝑘 |𝑢𝑖𝑘 > −𝛼𝐷𝑘 − 𝛾𝐼𝑘 ) = −𝛼𝐷𝑘 −𝛾𝐼𝑘⁄ 𝜎2) 𝜎2 1−𝛷(−𝛼𝐷𝑘 −𝛾𝐼𝑘⁄𝜎 ) 𝜎12 𝜙( The demand function becomes (5) 𝐸(𝑞𝑖𝑘 |𝑋𝑖𝑘 , 𝑑𝑖 > 0) = 𝛽𝑋𝑖𝑘 + −𝛼𝐷𝑘 −𝛾𝐼𝑘⁄ 𝜎2) −𝛼𝐷 −𝛾𝐼 𝑘 𝑘⁄ ) 𝜎2 1−𝛷( 𝜎2 𝜎12 𝜙( (6) where 𝜎2 is the standard deviation of 𝜀𝑖𝑘 and 𝜎12 is the covariance between 𝜀𝑖𝑘 and 𝑢𝑖𝑘 Thus, this method ogriginally estimates the Probit model explaining the choice of whether consume a type of vegetable or not (i.e estimating the coefficient 𝛼 in 𝑑𝑖 = 𝛼𝑍𝑖 + 𝑢𝑖 , then calculating the Inverse Mills Ratio (IMR): −𝛼𝐷 −𝛾𝐼 𝐼𝑀𝑅𝑖 = 𝜆 ( 𝑘 𝑘⁄ ) 𝜙( 𝜎2 −𝛼𝐷𝑘 − 𝛾𝐼𝑘⁄ 𝜎2 ) = 1−𝛷(−𝛼𝐷𝑘−𝛾𝐼𝑘⁄ ) (7) 𝜎2 Then estimating the demand (or expenditure) function with IMR 𝑞𝑖𝑘 = 𝛽𝑋𝑖𝑘 + 𝜑𝐼𝑀𝑅𝑖 + 𝜀𝑖𝑘 (8) where 𝜑 = 𝜎12 𝜎2 In this study, the equation system has demand functions for three types of vegetable that eat leaves, tubers and fruits, each of these with conventional and safe type Consequently, Probit models would be estimated correspondingly to types of vegetable Following the calculation for IMR variables for each type of vegetable and using estimated IMR variables for measuring the LA-AIDS demand equation system Estimation methods Demand function indicates quantity demanded that maximizes utility and as a result of utility maximization problem In addition to estimating single demand equation, it is possible to estimate the demand equation system Estimating the single demand equation has the critical limitation that is the separating goods from related ones This is an unreasonable assumption Moreover, the single demand equation will not help to show the correlation among the goods, for example, cross-price elasticity of demand can not be calculated Thus, the demand equation system with related goods is more preferred The dominant models are used to estimate demand equation system including Linear expenditure system, Rotterdam System, and Almost Ideal Demand System The AIDS model is the most regularly used, with two variants LA-AIDS and QUAIDS However, QUAIDS is more difficult to estimate, especially the demand equation system has a censoring problem with many cases of quantity demanded equals to While LA-AIDS is easier to estimate, despite the important disadvantage is that the log of expenditure ratio is assumed to be a linear function of the log of total expenditure However, this is not significant indeed, because of log-log formulation, the expenditure ratio fulfills nonlinear function with respect to the total expenditure Solely the expenditure ratio is compelled to be a square function of total expenditure – i.e expenditure ratio could be deviated when total expenditure reaches a certain level - then LA-AIDS is virtually inappropriate Consequently, the study uses LA-AIDS to estimate the demand equation system of vegetables LA-AIDSis developed by Deaton and Muellbauer (1980) from the expenditure function: ln 𝑒(𝑢, 𝑝) = 𝛼0 + ∑𝑖 𝛼𝑖 ln 𝑝𝑖 + ∑𝑖 𝛾𝑖𝑗 ln 𝑝𝑖 ln 𝑝𝑗 + 𝑢𝛽0 ∏ 𝑝𝑖 𝛽𝑖 (9) The estimated equation system would be: 𝑤𝑖 = 𝛼𝑖 + ∑𝑗 𝛾𝑖𝑗 ln 𝑝𝑗 + 𝛽𝑖 ln 𝑦 𝑃∗ + 𝜑𝑖 𝐼𝑀𝑅𝑖 + 𝜖𝑖 (10) where ln 𝑃 ∗ = ∑𝑗 𝑤𝑗 ln 𝑝𝑗 Note that the price variable used in this model is the predicted price from the OLS models, 𝐼𝑀𝑅𝑖 is the Inverse Mills Ratio estimated from the regression results of Probit models The demand function system in this objective has equations, however only equations are estimated The coefficient of the 6th equation would be computed by the theoretical constraints: • Additivity: ∑𝑖 𝛼𝑖 = 1, ∑𝑖 𝛽𝑖 = 0, ∑𝑖 𝛾𝑖𝑗 = • Homogeneity: ∑𝑗 𝛾𝑖𝑗 = (with all i) • Symmetry: 𝛾𝑖𝑗 = 𝛾𝑗𝑖 Therefore, these constraints in the fact that are imposed on this objective Some studies also examined these constraints, but this 𝑝𝑖𝑗 = ∫ ( ∑ 𝑒 𝑙 𝛽𝑋𝑖𝑗 𝑒 𝛽𝑍𝑖𝑙 ) 𝑓(𝛽)𝑑(𝛽) (16) where 𝑓 (𝛽) be the probability distributed function of 𝛽, because 𝛽 is a random variable instead of fixed variable as in CL To estimate 𝛽, the model will choose randomly 𝑅 values from 𝑓 (𝛽) and calculate the average probability from 𝑅 𝑅 be the number of draws, the larger 𝑅 the more accurate estimated parameters The research of Bierlaire (2003) shows that 𝑅 = 500 is the most effective value, thus this study uses 𝑅 = 500 Estimation of WTP The parameter 𝛽 describes the marginal utility of attributes For example, the parameter 𝛽𝑣𝑖𝑒𝑡𝐺𝐴𝑃 of 𝑉𝑖𝑒𝑡𝐺𝐴𝑃 variable shows the utility of VietGAP certificate Comparing this utility to the marginal utility of prices help to calculate the willingness to pay for VietGAP certificate attribute: 𝛽 𝑊𝑇𝑃𝑉𝑖𝑒𝑡𝐺𝐴𝑃 = − 𝛽4 𝑝 (17) where 𝛽𝑝 is the marginal utility of price (in thousand VND) In the basic model, the marginal utility of thousand VND to the buyer 𝑖 be: 𝛽𝑝 = 𝛽1 + 𝛽2 𝑖𝑛𝑐𝑜𝑚𝑒𝑖 (18) 𝑖𝑛𝑐𝑜𝑚𝑒𝑖 is the income of buyer 𝑖 If calculating at the mean value of income, the marginal utility of price becomes 𝛽𝑝 = 𝛽1 + 𝛽2 𝑖𝑛𝑐𝑜𝑚𝑒 ̅̅̅̅̅̅̅̅̅̅ (19) where 𝑖𝑛𝑐𝑜𝑚𝑒 ̅̅̅̅̅̅̅̅̅̅ is the average income of the sample OBJECTIVE 3: INFORMATION AND VEGETABLE STORE CHOICE This objective has two specific research objectives: (1) analyzing the impact of buyer characteristics on the vegetable store choice and (2) investigating the effect of distribution channel characteristics on the vegetable store choice This study uses MNL and RUM models to identify the factors influence store choice of buying vegetable The collected data shows each trip of buying vegetable in the last days in detail and thus each trip of buying vegetable is an observation – i.e one time of decision-making Each trip of buying vegetable is supposed to be exclusively travel to a unique store and therefore the alternatives are mutually exclusive From the results of initial surveys and pilot surveys, the store of buying vegetable is chosen to study as follows: Hypermarket/Supermarket Mini supermarket Specialty store Traditional market (legally established) Street vendor (illegally established) Local green grocery MNL Model The assumption that the utility of consumer 𝑖 of choosing the store 𝑚 from the shopping trip 𝑗 be a linear function as 𝑚 𝑈𝑖𝑗𝑚 = 𝛼𝑚 𝐷𝑖 + 𝛽𝑚 𝐼𝑖 + 𝜀𝑖𝑗 (20) where 𝑚 = 1,2, … ,6 indicating the distribution channels mentioned above, 𝐷𝑖 be a vector of the individual and household characteristics, and household 𝑖 consists of variables shown in Table (The characteristics of individual and household), 𝐼𝑖 be the information variables including the frequency of tracking safety and hygiene, the number of safety and hygiene standards violations and the number of poisoning cases experienced depicted in Table The parameters 𝛼𝑚 and 𝛽𝑚 presenting the influence of determinants on the utility of store choice 𝑚 Note that each of store would have a vector of parameters Each of 𝐷𝑖 variable would have 𝛼1 defining the utility of extra supermarket to individual with 𝐷𝑖 characteristics, 𝛼2 be the utility of minimart, and similar to other stores Let the probability of consumer 𝑖 from the trip 𝑗 of choosing the store 𝑚 be: 𝑝𝑖𝑗𝑚 = Pr(𝑦𝑖𝑗𝑚 = 1) (21) 𝑚 where 𝑦𝑖𝑗 be the dummy variable defines the store choice 𝑚 of the buyer 𝑖 from the trip 𝑗 Seting formal market is the base category, the log-odds would be: log 𝑝𝑖𝑗𝑚 𝑝𝑖𝑗4 = 𝛼𝑚 𝐷𝑖 + 𝛽𝑚 𝐼𝑖 ∀𝑚 ≠ (22) 𝑝1 𝑚 Note that log 𝑝𝑖𝑗1 = and 𝜀𝑖𝑗 is assumed to be the logistic 𝑖𝑗 distribution The probability of choosing the store 𝑘 would become: 𝑘 𝑘 𝑝𝑖𝑗 = 𝑉 𝑒 𝑖𝑗 (23) 𝑚 𝑉 ∑6𝑚=1 𝑒 𝑖𝑗 where 𝑉𝑖𝑗𝑚 = 𝛼𝑚 𝐷𝑖 + 𝛽𝑚 𝐼𝑖 The MNL model will estimate the parameters 𝛼𝑚 and 𝛽𝑚 for each of store (exclude 𝑚 = 4) by Maximum Likelihood method: log 𝐿 = ∑𝑖 ∑𝑗 ∑𝑚 𝑦𝑖𝑗𝑚 ln 𝑝𝑖𝑗𝑚 (24) This model helps to analyze the influence of individual and household characteristics, and the frequency of tracking safety and hygiene information on the store choice of buying vegetable RUM RUM model is applied to determine the impact of distribution channel attributes on the store choice of buying vegetable Table 4: Attributes of vegetable stores Variable Definition Price The price indicator of the closest store of each channel compared to the closest formal market (the price of the closest formal market = 0%, the negative value in this variable means that the price of the closest store lower than the formal market) Measurement units % Distance Freshness Diversity Input control Preprocessing Providing information Safety level Distance from the house to the closest store (outlet) of each distribution channel Vegetables at each shopping channel have different levels of freshness There are many types of vegetables, the diversity of spicies are sold at each distribution channel Whether vegetable stores have strict input control or not Vegetables at each channel before being sold are preprocess: cleaning, trimming, washing with clean water, and packaging The level of providing information on vegetable quality (Expired date, the origin of vegetables, processing, safety standards, etc.) of each shopping channel Personal evaluation of buyers on the probability of vegetables fulfilling safety standards at each channel Minutes = Freshness; = No freshness = Diversity; = No diversity = Strictly; = Not strictly = Carefully; = Not carefully = Completely; = Not completely % Model specification This model will estimate the utility function 𝑈𝑖𝑗𝑚 = 𝐴𝑆𝐶𝑚 + 𝜌𝑋𝑚 + 𝜀𝑖𝑗𝑚 (25) where 𝑋𝑚 is a vector of store attributes 𝑚 The attributes include distance, diversity, preprocessing, freshness, providing information and price The definition of attribues are shown in Table These variables are the personal evaluation of buyers for the store attributes of buying vegetable Interaction terms Those with higher income might have different responses to the price, thus income is interacted with price, is set into the model In some cases of buying vegetable, the buyer does not travel from home to store but in such a convenient way with other works and visit the store, therefore the parameter of distance in these cases might have the difference compared to the cases of traveling to stores from home Hence, the interaction between distance and dummy variable be convenient, is set into the model Consequently, the basic model will include the store attributes and two interaction variables Additionally, to investigate the influence of information on the store choice of buying vegetable, RUM model is set by the interaction variables between information and “safety levels” attributes This is to examine that those with different frequency of tracking information might have different responses to the safety levels of vegetables in the stores There would be models are estimated: • Model 1: Estimate equation (25) in which X includes the attributes in Table and two interaction variables (income x price and distance x convenient) • Model 2: This model comprises the variables in Table 1, and the interaction variables between safety level and frequency of tracking safety and hygiene standards information via TV, newspaper and internet, is set into the model • Model 3: The model consists of the variables in Model together with the interaction variables between safety level and the number of violations safety and hygiene standards cases watched, the number of poisoning cases watched, and the number of poisoning cases experienced by family members • Model 4: This model contains the variables in Model and all interaction variables used in Model and The reason of developing Model and that is the interaction variables might be correlated, resulting in the biasedness of parameters MAIN FINDINGS The demand for vegetable This study categories vegetables into groups: leafty vegetables, root vegetable and fruits, each group have kinds, the conventional and safe vegetable The safe vegetable is considered by vegetables that are certificated or are sold in supermarkets under strict input control procedures The results of survey show that the percentage of household consumes safe vegetable is about 50% The results of Probit model explaining the choice of consuming vegetable types indicate that the households with small size, high income and having more childrens under tend to have higher likelihood of choosing safe vegetable Those who tend to buy higher safe vegetable including male, elders, office workers, student, homemaker, vegetarian, and those without bargain habit The frequency of tracking safety and hygiene standards information via TV, newspaper, and internet generally has no impact on the choice of safe and conventional vegetables However, the information of poisoning and safety and hygiene standards violations cases which induces the consumer less purchase conventional vegetable and buying safe vegetable instead While the number of poisoning cases experienced by family members in the past 12 months insignificantly effects the choice of safe vegetable The results of demand equation system using LA-AIDS describing the expenditure and quantity demanded of safe vegetable, those who spend higher for safe vegetable consisting the households with more children, male, office workers, student, and homemaker Meanwhile, the level of education insignificantly affects the demand for safe vegetable The frequency of tracking safety and hygiene standards information in all stores has no impact the demand for safe vegetable The information of violations cases watched has the influence in a manner of buying less conventional leafty vegetables and buying more the safe leafty and root vegetables, probably being the leafty vegetables have hazards of safety violations higher than root vegetables and fruits While, the information of poisoning cases watched and the number of poisoning cases experienced by family members does not affect the demand for safe vegetable The estimated Hicksian and Marshallian elasticities of demand are low, which shows that a weakness in the responses of consumer to vegetable price The conventional and safe vegetables neither complements nor substitutes In general, the price of a conventional vegetable has the effect of quantity demanded of other conventional vegetables, but has no impact the quantity demanded of safe vegetable, and vice versa This implies that the price of conventional vegetable in the current levels does not influence the demand for safe vegetable, the consumer only responses to the safe vegetable as the price of other safe vegetables be changed Especially, the safe leafty vegetable elastics with the price of conventional root vegetables and fruits (substitution effects) and the price of conventional fruit vegetables (income effects) WTP for safe vegetable This objective uses the choice experiments with hypothetical scenario The Conditional Logit and Mixed Logit model is utilized to estimate the utility function for the attributes of two vegetables The regression results of two models are generally identical The result of Conditional Logit model is used to calculate the willingness to pay for vegetable attributes The WTP estimation results show that consumers are not willing to pay higher for VietGAP water spinach and VietGAP carrots than conventional ones The organic certification is more preferred because buyers are willing to pay more than VND 12,000 /kg to buy organic water spinach and more than VND 22,000/kg to buy organic carrots The organic certification is paid higher price than VietGAP certification which is understandable, but even the safety guarantee of sellers is more appreciated than VietGAP Water spinach which is guaranteed by sellers with compensated amount of VND 300 million if the toxic contents exceeding the safety threshold, is paid more than VND 11,000/kg compared to the unguaranteed ones, and more than VND 22,000/kg of carrots The attribute of packaging and manufacturer information should be used depending on vegetables In this objective, the results indicate that these attributes are important for water spinach, while is not important for carrots The buyers are willing to pay more than VND 15,000/kg to buy water spinach with packaging and manufacturer information, although they are not willing to pay higher price for carrots The buyers ask to have the origin stamps for carrots instead, and are willing to pay more than VND 15,000/kg for carrots with traceability stamps While the Conditional Logit model shows that consumers are not willing to pay for VietGAP, the result of Mixed Logit model reveals more information The standard deviation of VietGAP coefficient is different from and the value is high, which implies that a half of buyers prefer to VietGAP water spinach and are willing to pay higher for VietGAP ones, but the other half of buyers does not prefer to VietGAP water spinach Although the average WTP equals to 0, there is a heterogeneity in preferences for VietGAP water spinach However, there is a homogeneity in preferences for VietGAP carrots: most of the buyers are willing to pay higher price for VietGAP carrots The MX model also shows that the willingness to pay higher for water spinach and carrots with organic certification, the preferences for this attribute is also heterogenous in both vegetables This implies that although most consumers prefer organic certification and are willing to pay higher price, many consumers are not considered in this certification The frequency of tracking safety and hygiene standards information generally less affects the WTP for VietGAP certification, organic certification and safety guarantee The trend of general influence that is those with moderate frequency of tracking information are willing to pay higher than those with irregular tracking information, while those with everyday tracking information are not willing to pay higher than those with irregular tracking information This is probably because those who follow the information at the frequent and moderate level, are more sensitive about the safety and hygiene standards, therefore are willing to pay higher price for safety attributes However, those who follow the information at very frequent level might lose their trust in the certifications and guarantees from the sellers, thus are not willing to pay for these attributes This indicates that, in a manner of speaking, the information of safety and hygiene standards in the social media is failing to encourage the development of safe vegetable Meanwhile, the information of safety and hygiene standards violation cases, the number of poisoning cases, and the number of poisoning cases experienced by family members does not influence the preferences for VietGAP, organic certification, and safety guarantee, therefore the willingness to pay for these attributes is fixed Vegetable store choice The third objective of study investigates the drivers affecting vegetable store choice, including the factors of buyer characteristics and store attributes, with the frequency of tracking information which are the key variables The study observes the buyer choice of buying vegetable for all trip in the last week, using the MNL model to analyze the impact of buyer characteristics, and the CL/MX model to analyze the effect of store attributes The results of survey show that on average, each buyer purchases vegetables times per week, each time value approximately VND 42,000 Those who tend to purchase vegetables in the modern channels consisting the households with less members, less elders, and those who are male, high income, older people, without bargaining habit, vegetarian, office worker, student and homemaker Education and the number of children in the household has no effect The analysis of store attributes points out that the distance variable is very important The farther the store is, the less likely store is chosen This preference takes advantages for the traditional channels that are closer to residential areas Other important attributes comprise the freshness, safety level and providing information, while the diversity, input control and preprocessing does not affect the vegetable store choice Regarding the impact of information, MNL model shows that the effect of frequency of tracking safety and hygiene standards information on the vegetable store choice is very limited in general The Internet has absolutely no effect on the store choice The frequency of tracking safety and hygiene information at the moderate level is more likely to choose the traditional channel, contrary to the frequency tracking information at everyday The information of safety and hygiene standards violation cases and the number of poisoning cases show the general influence that a decrease in the probability of choosing traditional channels and an increase in the probability of choosing the modern channels Households have the higher number of poisoning cases experienced by family members are more likely to choose the minimart CL model with the interaction variables between information and safety level shows that those with the higher frequency of tracking safety and hygiene standards information via TV are less sensitive to the safety level, while those with the higher frequency of tracking information via internet and newspaper are more sensitive to the safety level The number of poisoning and violation cases watched that induces the consumer’s respond more strongly for the safety level and thus they tend to choose the safer stores However, the number of poisoning cases experienced by family members in the past induces the consumers to be familiar with and fewer responses to the safety level POLICY IMPLICATIONS The conventional vegetable does not substitute for safe vegetable Although the asymmetric information theory states that the conventional vegetable has the lower production costs which tend to push the safe vegetable out of the market, but the analysis result of demand equation system in this study shows that the conventional vegetable does not substitute for the safe vegetable In particular, the decrease in the price of conventional vegetable will not significantly reduce the demand for safe vegetable This is a good signal, showing the asymmetric information will be difficult to drive the safe vegetable out of the market This is probably being the difference in the product of the two groups Even though the traditional markets have the advantage of being close to home and an ancient culture, but the modern markets have its own advantages such as clean store’s space and modern shopping way These modern distribution channels therefore should be maintained and promote its own advantages against the traditional channels Low elasticities The safe vegetable has the low price elasticity of demand that also be a good signal The safe vegetable buyers not strongly respond to the change in price This implies that the safe vegetable distributors, in the case of necessity, can raise the price without considering about a significant decrease in quantity demanded In fact, the price of vegetables in traditional markets are quite fluctuating, depending on origin, quality, freshness and store format For example, the price of vegetables in the peak hour and off-peak hour greatly differs In many cases, the price of vegetables in traditional markets is as high as or higher than the price of the same vegetables in supermarket This induces buyers in the modern channels easily accept higher prices, resulting in the demand for safe vegetable be inelastic Moreover, higher prices can be a signal of quality Because vegetables sold at the lower prices might be considered unsafe VietGAP is not really a signal of safety While current retail channels, both traditional and modern markets, use VietGAP term to send the signal of safe vegetable to consumer, this research result shows that consumers are not truely willing to pay higher for VietGAP vegetables, at least for water spinach and carrots There is high heterogeneity in the preferences of buyers for VietGAP certification Some buyers appreciate VietGAP certification, the others not These buyers might not believe in the compliance of manufacturer for VietGAP production process For the average calculated of the sample, the buyers are not willing to pay any additional amount for VietGAP vegetables This implies that retailers need to have another evidence to send the signal of quality and safety and hygiene standards, at the same time VietGAP certification organization need to reconsider the certification process and supervise the compliance with safety regulatory standards Organic certification is a symbol of safety and hygiene While VietGAP certification is not appreciated, this research result reveals that the buyers are willing to pay more than VND 12,000/kg for organic water spinach against conventional water spinach, and VND 22,000/kg for organic carrots against conventional carrots This is a high willingness to pay, close to the market prices of these two vegetables (VND 16,000 for conventional water spinach and VND 23,000 for conventional carrots) This states that the buyers appreciate organic certification, and the organic certification is a really effective way of sending the signal This means that retailers should focus on organic vegetables because it is an evidence of safety and hygiene standards, at the same instance, note that on average the buyers are willing to pay twice times for organic water spinach and many buyers are willing to pay much higher The safety guarantee of sellers is very important In case the organic vegetable is infeasible, another equivalently effective approach is the safety guarantee of sellers The research result in objective shows that the buyers evaluate the safety guarantee of sellers as high as the organic certification This indicates that the sellers can use the forms of safety guarantee to attract the buyers, and the possibe corresponding way is the higher price of vegetable as a way of sending the signal of quality and safety and hygiene standards In fact, regulators also need a monitoring system to ensure the validity of safety guarantee of sellers, and simultaneously maintain the competitive advantages to conduct the cross-monitoring Packaging, manufacturer information and traceability stamps should be used selectively The buyers are willing to pay higher for water spinach having packaging, manufacturer information and without traceability stamps This might be because water spinach is easily broken and is a regular vegetable of consumption, thus solely the manufacturer information printed in the packaging is enough, and the buyers will not need to scan the origin stamps whenever buying water spinach Meanwhile carrots without packaging, it requires QR code Following the logical reasoning of water spinach, carrots is not easily broken, and therefore does not require packaging Carrots is an irregular vegetable of consumption amount versus water spinach, therefore the buyers might accept to scan the QR code when buying This implies that packaging and manufacturer information is necessary for vegetables that are easily broken The buyers also are not willing to scan the traceability stamps whenever buying so only scan for irregular vegetables The traceability therefore only uses for vegetables that are bought infrequently Vegetables that are use frequently and bought at many times should provide the manufacturer information for convenient identification Additionally, the traceability system by electronic stamps have been more effective than the traceability system with manually original, and consequently it should be encouraged to use The modern channels need to get closer to buyers The analysis result in objective reveals that distance is very important to consumer on the vegetable store choice Even though in case of buying vegetable being the convenient of other works, the buyers tend to choose the local store is close to their home This means that when a channel is close to buyers, it will keep customer loyalty in cases of the farther stores This is probably because traditional markets, taking the advantages that is established closely residential areas, have been available from many generations As a result, the traditional markets presently have many disadvantages, including the safety and hygiene standards of vegetables, have been captured the majority of buyers Therefore, the modern distribution channels that wish to expand market share need to grow their distribution network to reduce the distance to buyers The vast expansion of the minimart since 2016 was a right path Safety level, input control and providing information The analysis result shows that the buyers appreciate the safety level and providing information The vegetable stores are considered to have a higher proportion of safe vegetable, and providing more detailed information of vegetable, will have the probability of choosing safe vegetable higher While the vegetable is strictly controlled the input by the sellers that is not important This has some policy implications One is because the proportion of safe vegetable is important and providing information is also important to the buyers, the modern vegetable stores should provide the information of safety level of vegetables that are distributed by them Currently, the buyers not have the information on safety level, thus they have to predict based on the information experienced This information might be bias, whereas it significantly affects the vegetable store choice Therefore, the modern distribution channels providing information on the proportion of safe vegetable has great implications First is the providing information more exactly If the proportion of safe vegetable in the modern distribution channels is higher than the proportion that is predicted by the buyers, this will attract more consumers The other is the consumers are not interested in controlling the input by the sellers This is a regrettable omission because the modern vegetable distribution channels, at least supermarkets and minimarts, currently have a strict input quality control process Therefore, the modern distribution channels should provide information of input control process for consumers so that they can feel more secure about safety and hygiene standards This will help modern distribution channels attract more buyers Other attributes of vegetable stores The analysis result also shows that the freshness of vegetable has a significant effect to vegetable store choice Hence the distribution channels need to focus on the storage and preservation system to keep fresh vegetables Meanwhile, the diversity and preprocessing are insignificant This implies that the distribution channels should focus on the vegetables that are highest consumption amount, and extension of vegetable groups will not really help to attract buyers The information and frequency of tracking information Similar to many other studies, the research result of this study also shows that the information has very limited impact on the demand and store choice behavior for safe vegetable First is the frequency of tracking safety and hygiene standards information through channels neither affect the decision of buying safe vegetable nor impact the quantity demanded This implies that the current information channels are not effective in driving consumer to use safe vegetable Second is the frequency of tracking information through channels, in some cases, affects the willingness to pay for safety attributes of vegetable, and thus willing to pay higher for safe vegetable The information tracking at moderate frequency induces the willingness to pay for safe vegetable higher and the probability of choosing modern channels higher The information on the safety and hygiene standards violation cases and poisoning cases, in most cases, does not affect the probability of choosing safe vegetable and the quantity demanded of safe vegetable Nevertheless, this information has advantages for modern channels Those who watched more this information tend to choose to buy vegetables in modern channels The number of poisoning cases experienced by family members does not impact the probability of choosing safe vegetable, the quantity demanded of safe vegetable and the preferences for safety attributes, as well as the vegetable store choice Other factors The analysis results also indicate that those who buy safe vegetable and choose modern channels are male, older people, office worker, student, homemaker, and individual without bargain habit This means that the distributors of safe vegetable have much potential to expand the market share, such as other occupations, or female buyers In addition, modern channels should actively pursue the discount strategy for the specific products to attract more buyers who prefer to bargain ... OBJECTIVE 2: INFORMATION AND WTP FOR SAFE VEGETABLE In this objective, the study evaluates the WTP for safety attributes and investigating the effect of information on WTP based on the Choice Experiment... different, thus the safety attributes might differ The experiment uses attributes The definition and attribute levels are shown in Table Table 3: Attributes and their levels Attribute Definition Price... information on WTP for safety attributes, the information variables (Table 2) would be interacted with these safety attributes If the information variables interact with safety attributes are simultaneously